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When it comes to tall buildings, there is such a thing as too tall

Published on February 1, 2018 in the Financial Post

Often, the marginal increase in revenue does not match the marginal increase in construction costs for adding floors at high elevations

Canada is no stranger to tall buildings, as residents of all the country’s major cities will attest. Vancouver, for its relatively small population, boasts the highest concentration of tall buildings in North America.

To date, though, no habitable building in Canada has broken the 1,000-foot barrier. This is expected to change by 2023, when a 1,005-ft mixed-use building in downtown Toronto, The One, is scheduled to open.

By comparison, the Burj Khalifa in Dubai, the tallest building in the world (at least for now), is 2,717 feet tall.

As construction technology has improved over time, buildings have become ever taller. Steel beams, caissons, elevators and the ingenuity of structural engineers, to name a few, have helped buildings reach unprecedented heights.

But this also raises an important question: How tall is too tall? That is, is there an economically optimal height for a building? Apparently, there is.

Academic and industry research shows that the cost of adding an additional floor at a higher elevation is more than adding an additional floor at a lower elevation. And often, the marginal increase in revenue does not match the marginal increase in construction costs for adding floors at high elevations.

Jason Barr is a professor of economics at Rutgers University and a leading authority on construction economics. He wants to know when a building becomes too tall, economically speaking. He analyzed the heights of 458 skyscrapers in Manhattan that were built between 1895 and 2004.

Professor Barr found that many iconic tall buildings were much taller than their optimal economic heights. For instance, the Empire State Building, with 102 floors, carried 54 more floors than were economically justified, making it the tallest of the “too-tall” buildings.

The list of too-tall buildings included many that were world-record holders — i.e., they were built to be the tallest structure of their time — and others that were corporate headquarters, with the building’s height serving as a proxy for a company’s financial might. Thus, in many cases, the height of the building was not justified by economic reasoning but by a sense of status and prestige.

The Council on Tall Buildings and Urban Habitat maintains a database of building heights. As per Council’s data, Toronto is the undisputed leader in tall structures in Canada with seven of the tallest buildings (existing and under construction) located in its downtown. At 251 meters, the eighth tallest building, Stantec Tower, is under construction in Edmonton followed by Brookfield Place East in Calgary being the 9th.

Whereas Vancouver has the highest concentration of tall buildings, they are not necessarily as tall as those in other cities. The tallest building in Vancouver, Living Shangri-La, for instance, is 201 meters tall and is ranked 33rd in Canada.

American cities led the world in erecting tall structures in the twentieth century, and it became a symbol of American might. But that was last century

Sam Mizrahi is developing The One, the building challenging the 1,000-foot barrier. Though the building will be 85-storeys, the unusually high ceilings will make it taller than other 85-storey structures.

We asked Sam if building heights of very tall buildings were necessarily a statement of prestige and status and devoid of economic reasoning. He disagreed. He believes that very tall buildings, especially those over 1,000 feet, are a marvel of structural engineering and that height considerations are not trivial. In The One’s case, the building height was determined after extensive market research and consultations with anchor tenants and others who showed a strong preference for high ceilings.

This could very well be true for buildings developed strictly for commercial reasons. But sponsors of a planned corporate headquarters for a large firm may feel the urge to be taller than their competitors’ buildings. This partially explains why tall buildings are getting even taller over time.

American cities led the world in erecting tall structures in the twentieth century, and it became a symbol of American might. But that was last century.

The tallest structures currently under construction or being planned are not in the United States and are significantly taller than the tallest American buildings. At 3,281 feet, Jeddah Tower in Saudi Arabia will soon be the tallest in the world. Many more tall buildings are being planned in China, Indonesia, Malaysia and the Middle East.

Those rivalling America for economic supremacy are aware of the significance of powerful symbols. Height is symbolic of power if not of economic wisdom.